WVC 11 - 24 - 4 B
§11-24-4b. Dividends paid deduction to be added back in
determining net income for captive real estate
investment trusts and regulated investment
companies; deductible intangible expenses and
deductible interest paid to be added back in
determining net income of certain entities.
(a) The dividend paid deduction otherwise allowed by federal
law in computing net income of a real estate investment trust that
is subject to federal income tax shall be added back in computing
the tax imposed by this article if the real estate investment trust
is a captive real estate investment trust.

(b) The dividend paid deduction otherwise allowed by federal
law in computing net income of a regulated investment company that
is subject to federal income tax shall be added back in computing
the tax imposed by this article unless the regulated investment
company is a qualified regulated investment company as defined in
this article.

(c) Intangible expenses otherwise deductible to be added back
for certain taxpayers. --

(1) For purposes of computing its net income under this
chapter, a taxpayer shall add back otherwise deductible intangible
expense directly or indirectly paid, accrued or incurred in
connection with one or more direct or indirect transactions with
one or more related members.

(2) If the related member was subject to tax in this state or another state or possession of the United States or a foreign
nation or some combination thereof on a tax base that included the
intangible expense paid, accrued or incurred by the taxpayer, the
taxpayer shall receive a credit against tax due in this state in an
amount equal to the higher of the tax paid by the related member
with respect to the portion of its income representing the
intangible expense paid, accrued or incurred by the taxpayer, or
the tax that would have been paid by the related member with
respect to that portion of its income if: (A) That portion of its
income had not been offset by expenses or losses; or (B) the tax
liability had not been offset by a credit or credits. The credit
determined shall be multiplied by the apportionment factor of the
taxpayer in this state. However, in no case shall the credit
exceed the taxpayer's liability in this state attributable to the
net income taxed as a result of the adjustment required by
subdivision (1) of this subsection.

(3) (A) The adjustment required in subdivision (1) of this
subsection and the credit allowed in subdivision (2) of this
subsection shall not apply to the portion of the intangible expense
that the taxpayer establishes by clear and convincing evidence
meets both of the following requirements: (i) The related member
during the same taxable year directly or indirectly paid, accrued
or incurred a portion to a person that is not a related member; and
(ii) the transaction giving rise to the intangible expense between
the taxpayer and the related member was undertaken for a valid business purpose.

(B) The adjustment required in subdivision (1) of this
subsection and the credit allowed in subdivision (2) of this
subsection shall not apply if the taxpayer establishes by clear and
convincing evidence of the type and in the form specified by the
Tax Commissioner that: (i) The related member was subject to tax
on its net income in this state or another state or possession of
the United States or some combination thereof; (ii) the tax base
for said tax included the intangible expense paid, accrued or
incurred by the taxpayer; and (iii) the aggregate effective rate of
tax applied to the related member is no less than the tax rate
imposed under this article.

(C) The adjustment required in subdivision (1) of this
subsection and the credit allowed in subdivision (2) of this
subsection shall not apply if the taxpayer establishes by clear and
convincing evidence of the type and in the form specified by the
commissioner that: (i) The intangible expense was paid, accrued or
incurred to a related member organized under the laws of a country
other than the United States; (ii) the related member's income from
the transaction was subject to a comprehensive income tax treaty
between that country and the United States; (iii) the related
member's income from the transaction was taxed in that country at
a tax rate at least equal to that imposed by this state; and (iv)
the intangible expense was paid, accrued or incurred pursuant to a
transaction that was undertaken for a valid business purpose and using terms that reflect an arm's length relationship.

(D) The adjustment required in subdivision (1) of this
subsection and the credit allowed in subdivision (2) of this
subsection shall not apply if the corporation and the commissioner
agree in writing to the application or use of alternative
adjustments or computations. The commissioner may, in his or her
discretion, agree to the application or use of alternative
adjustments or computations when he or she concludes that in the
absence of agreement the income of the taxpayer would not be
reflected accurately.

(d) Interest expense otherwise deductible to be added back for
certain taxpayers. --

(1) For purposes of computing its net income under this
chapter, a taxpayer shall add back otherwise deductible interest
paid, accrued or incurred to a related member during the taxable
year.

(2) If the related member was subject to tax in this state or
another state or possession of the United States or a foreign
nation or some combination thereof on a tax base that included the
interest expense paid, accrued or incurred by the taxpayer, the
taxpayer shall receive a credit against tax due in this state equal
to the higher of the tax paid by the related member with respect to
the portion of its income representing the interest expense paid,
accrued or incurred by the taxpayer, or the tax that would have
been paid by the related member with respect to that portion of its income if: (A) That portion of its income had not been offset by
expenses or losses; or (B) the tax liability had not been offset by
a credit or credits. The credit determined shall be multiplied by
the apportionment factor of the taxpayer in this state. However,
in no case shall the credit exceed the taxpayer's liability in this
state attributable to the tax imposed under this article as a
result of the adjustment required by subdivision (1) of this
subsection.

(3) (A) The adjustment required in subdivision (1) of this
subsection and the credit allowed in subdivision (2) of this
subsection shall not apply if the taxpayer establishes by clear and
convincing evidence, of the type and in the form determined by the
commissioner, that: (i) The transaction giving rise to interest
expense between the taxpayer and the related member was undertaken
for a valid business purpose; and (ii) the interest expense was
paid, accrued or incurred using terms that reflect an arm's length
relationship.

(B) The adjustment required in subdivision (1) of this
subsection and the credit allowed in subdivision (2) of this
subsection shall not apply if the taxpayer establishes by clear and
convincing evidence of the type and in the form specified by the
commissioner that: (i) The related member was subject to tax on
its net income in this state or another state or possession of the
United States or some combination thereof; (ii) the tax base for
said tax included the interest expense paid, accrued or incurred by the taxpayer; and (iii) the aggregate effective rate of tax applied
to the related member is no less than the statutory rate of tax
applied to the taxpayer under this chapter.

(C) The adjustment required in subdivision (1) of this
subsection and the credit allowed in subdivision (2) of this
subsection shall not apply if the taxpayer establishes by clear and
convincing evidence of the type and in the form specified by the
commissioner that: (i) The interest expense is paid, accrued or
incurred to a related member organized under the laws of a country
other than the United States; (ii) the related member's income from
the transaction is subject to a comprehensive income tax treaty
between that country and the United States; (iii) the related
member's income from the transaction is taxed in that country at a
tax rate at least equal to that imposed by this state; and (iv) the
interest expense was paid, accrued or incurred pursuant to a
transaction that was undertaken for a valid business purpose and
using terms that reflect an arm's length relationship.

(D) The adjustment required in subdivision (1) of this
subsection and the credit allowed in subdivision (2) of this
subsection shall not apply if the corporation and the commissioner
agree in writing to the application or use of alternative
adjustments or computations. The commissioner may, in his or her
discretion, agree to the application or use of alternative
adjustments or computations when he or she concludes that in the
absence of agreement the income of the taxpayer would not be properly reflected.

(e) Nothing in this subsection shall be construed to limit or
negate the commissioner's authority to otherwise enter into
agreements and compromises otherwise allowed by law.

(f) Effective date. -- The amendments to this section made in
the year 2009 are retroactive and are effective for tax years
beginning on and after January 1, 2009.

Note: WV Code updated with legislation passed through the 2014 1st Special Session
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